Having It Both Ways

Pretty much everyone inside and outside of Washington is disappointed in the fiscal cliff deal. Some argue it doesn’t do enough. Others think it goes too far. There’s even disagreement on a crucial point: Does the deal increase the deficit or reduce it?

The Congressional Budget Office said it will increase the deficit by nearly $4 trillion over 10 years. It arrived at that figure by comparing the terms of the deal with the revenue the government would have raised if all of the Bush-era tax cuts and other expiring tax credits, had ended, as they were scheduled to do.

President Obama said the deal raises revenue by $620 billion over 10 years. That’s the amount gained by increasing taxes on high income taxpayers, compared with a scenario in which all of the tax cuts had been extended.

In other words, the C.B.O. and the White House are using different starting points, or “baselines” in budget speak.
Adding to the confusion, Republicans have shown a tendency to use whichever baseline helps them score political points. When it comes to their wealthy constituents, Republicans use a baseline that makes it look like the rich took a hit – which they have to some extent. But when it comes to the poor, they use a baseline that makes it look like low-income Americans have gotten a new benefit, when in fact nothing has changed.

Case in point, Republicans are staking out the position that, having made a heroic sacrifice by allowing taxes to rise on high income Americans, it’s time to slash spending. So, like the president, they emphasize that taxes have gone up (as compared with Congress extending all of the Bush-era cuts). Then they disparage the deal as spendthrift by pointing out that, according to the C.B.O., it raises spending by $330 billion (as compared with Congress extending none of the low income tax credits that were included in the deal,and which technically count as spending).

The fact that there is no agreed-upon baseline is a problem in and of itself. How do you decide what needs to be done going forward if you can’t agree on where you are? But the Republicans aren’t just choosing a different starting point from the White House: They’re trying to have it both ways. Whether from ignorance or dishonesty, that doesn’t bode well for future talks over deficit reduction.